[Harv72b]

I agree with the conclusion, but not with all of the reasoning.

It's been mentioned before in this thread, but I believe you're pretty far off with point #3--the major sites need the high volume (and, typically, better) players. Why? Because they are high volume; they keep the games going by playing the tens of thousands of hands/month that they do. The recreational players? They are recreational. They play when they feel like it, typically far fewer hands than the sharks, and at any point might decide to just quit playing because poker represents a passtime for them, and not a profitable side business (or primary source of income).

Your point that the grinders are less likely to make more deposits on the site is also faulty--at least when you're talking about micro/small limit grinders, they probably tend to make more cash deposits (certainly more regular ones) in order to take advantage of various reload bonus offers. The typical recreational player probably does not bother with these bonuses, and only deposits when they run out of chips. That, of course, assuming that they decide to keep playing poker when this happens.

The poker sites also fully realize the need to keep their player base over time (which is why you see some sort of frequent player/rewards program on every online poker room). Simply put, the grinders are the ones who are most likely to stay put over time, especially if the site in question can also attract a large pool of donators.

What you are looking at is not a case of an industry ignoring the traditional conception of how market forces work--the market forces are working normally here, too. It's just that you're looking at it from the wrong angle. What the sites are attempting to do is find the perfect balance of the maximum rake they can extract from us (the grinders & winning players) while we still make enough of a profit from the fish to offset this rake and make playing on their particular servers +EV. Pacific, I believe, is an exception to these rules because, between the terrible software & the inability to multi-table, I doubt that many of these grinders & high volume players spend a lot of their time there anyway. If anything, Pacific is trying to carve out its own niche in the industry by being more friendly to the recreational players, by making it unprofitable for most winning players to play there.

What I think you'll see instead of a trend towards more sites carving out their own little niches, as was mentioned already, and more in the way of bonus wars and promotional gimmicks to attract new players.

Just my 2 cents.

One other point: for the regular players, such as most of us here on 2+2, who understand rake, one effect that increasing the rake will have is to drive us up in limits. The higher the limit, the less effect that rake will have on our profits. This also serves the poker sites well, as it means fewer sharks to clean out the new players on the smaller limits, which in turn makes it more likely that these new players will enjoy good enough results (even if it just means a steady but small loss rate) to continue playing.